v3.26.1
Income Taxes
 6 Months Ended
Jun. 30, 2026
Income Tax Disclosure [Abstract]  
Income Taxes
9. Income Taxes
Our income tax provision and effective income tax rates, including the effects of period-specific events, were:
  
Three months ended
June 30,
Six months ended
June 30,
(dollars in thousands)
2026
2025
2026
2025
Income tax provision
$
11,063 
$
13,575 
$
17,729 
$
14,117 
Effective income tax rate
23.8 
%
33.9 
%
21.0 
%
31.4 
%
The decreases in our effective income tax rate for the three and six months ended June 30, 2026 when compared to the same periods in 2025 were primarily due to a reduction in our valuation allowance recognized in 2026, reflected in our annual effective tax rate, resulting from the effect of OBBBA on the realizability of our deferred tax assets we expect to realize. This benefit was partially offset by the U.S. tax on certain foreign earnings under the net controlled foreign corporations ("CFC") tested income ("NCTI") regime, state income taxes, the limitation on deductible executive compensation under Section 162(m) and net discrete expense associated with our unrecognized tax benefits. Although our effective tax rate decreased in both periods, our income tax provision decreased for the three months ended June 30, 2026, and increased for the six months ended June 30, 2026, in each case reflecting the change in pre-tax book income between periods, together with the effect of the valuation allowance reduction described above.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law. The legislation makes permanent certain provisions of the 2017 Tax Cuts and Jobs Act, and also modifies the U.S. taxation of foreign earnings along with changes to the calculation of foreign tax credits. Under ASC 740, we recognized the impact of the first phase of the law in the third quarter of 2025 and continue to recognize its impacts in 2026.
We continue to maintain a valuation allowance against a portion of our deferred tax assets. A significant item of objective negative evidence remains our cumulative loss measured over the most recent three-year period, which precludes us from placing weight on projections of future taxable income in assessing the realizability of the remaining deferred tax assets. The reduction recognized in 2026 described above arises from sources of taxable income that do not depend on those projections. The timing and amount of any discrete release remain uncertain and depend on the level of profitability we actually achieve and our reassessment of all available evidence each reporting period.